Why is it that lawyers are considered to be one of the wealthier professions? After all, most attorneys don’t make annual salaries in the mid-six figures like movies and television might have you believe.
In actuality, conservative estimates such as Payscale.com peg median attorney salaraies in the range of $46,517 – $152,887. Yet, according to Dr. Thomas Stanley’s The Millionaire Next Door, over 8% of millionaire households are headed by a lawyer. If lawyers aren’t all raking in the dough and relying on oversized salaries to pad their bank account, how is their profession so strongly synonymous with wealth? Perhaps it has more to do with the way they work and earn their money than the paycheck itself — which means that you and I can follow their lead.
Know the Value of Your Time
Telephone call from client regarding issues arising from **insert legal issue** = $50 (.2 hours @ $250/hr)
“$50 for a phone call? But I only talked to the guy for 12 minutes! What gives?”
Chances are, if you have ever had to hire an attorney (or know someone who has), the scenario above sounds pretty familiar.
The truth is, nobody likes paying their attorney bills, but that doesn’t mean you can’t learn something from them.
Attorneys know what their time is worth and aren’t afraid to charge for it. When it comes down to it, everybody’s time has value. Most of us have to work for a living, and whenever we perform work for someone else, we are accepting a certain value for our time.
But what is your time worth? When we first start out in our careers, our time is generally valued less than someone with more experience or education. We usually begin our working lives by letting other people tell us what our time is worth, whether that’s $11 per hour, $50,000 per year, and so on. As time goes on, and as we develop our talents and skills, our time becomes more valuable.
Regardless of your job, there are ways of helping you get an idea of what your time is really worth. Websites such as Glassdoor or Salary.com can be useful tools to gauge what other people with similar jobs and skills are earning. Joining trade associations or industry social groups may give you an opportunity to form relationships with others in your field, allowing you the chance to get a feel for going pay rates in your industry.
For freelancers and entrepreneurs, another way to determine the value of your time is good old supply and demand. Say you are a freelance wedding photographer and you charge couples $300 for a 2-hour engagement photo session. If you have so many appointments that you are constantly rushing from session to session, it may be that you are charging too little.
Try raising your rate and gauging whether you book more or fewer appointments, so you can get an idea of how much people are willing to pay for your time. Then, you can adjust your rate up or down as warranted. Coincidentally, this is how many attorneys set their hourly rate.
Attorneys keep track of their time. Many attorneys, myself included, work on the traditional hourly billing system. This means attorneys will usually bill their time in fractional-hour increments. For most, this means increments of one-tenth of an hour (hence the .2 hours example above).
Sixty minute hours, of course, means that .1hr is equal to six minutes. Yes, most attorneys will keep track of their workdays in six-minute increments.
While I don’t necessarily recommend that you keep such close tabs on time spent at work, I think everyone could benefit from some increased conscientiousness about how they spend their day. After all, most fiscally responsible people track their money in some form or fashion, whether by budgeting every dollar or just checking their bank statements for a few minutes every month. Why not do the same with your time?
Know When to Delegate
Attorneys know which tasks to complete themselves, and which to delegate. In fact, there is a whole profession (paralegal) which is largely devoted to assisting attorneys with completing tasks, scheduling meetings, filing documents, and much more.
A lot of people, professionals and entrepreneurs in particular, tend to struggle with delegation. They might think, “I don’t need help” or “I can do that better or faster.” It can be hard to let go. But delegation is more about knowing how to make the best use of your time. It can free up your time to focus on more important tasks, or even just give you space to relax or get some distance and perspective.
Advocate and Negotiate (for Yourself)
Attorneys argue. Your attorney argues on your behalf, and has a fiduciary duty to act in your best interest. If the ads on late night television and bus benches are any indication, some lawyers even go so far as to “fight for you.”
Most people tend to avoid conflict in most aspects of their lives. This is doubly true when it comes to money issues. Examples of this abound: employees afraid to ask for a well-deserved raise, spouses hesitant to address household budget issues, and would-be investors too timid to question an advisor’s fee structure.
Learning to advocate on your own behalf can lead to a considerable increase in your financial well-being over the course of your lifetime. Failing to do so, likewise, can cost you.
Conflict can be intimidating. As with any skill, however, it gets easier with practice. There are a few basic starting points for effectively advocating for yourself:
- Know what you want
- Believe in yourself (speak with confidence)
- State the facts
- Be firm and persistent.
While preparing, it can sometimes be helpful to imagine that instead of advocating for yourself, you are doing it on behalf of a close friend or family member. Often times, people feel more comfortable standing up for others.
Learning to Calculate Risk
There is a reason why attorneys are the subject of many jokes characterizing them as naysayers, party poopers, and pessimists. True enough, a large part of an attorney’s job requires identifying and assessing risks.
While you may not want to go around your house adding warning signs to all possible dangers, learning to identify potential negative outcomes before they occur can be a very valuable skill to have.
Identifying risks is only half the battle (the easier half, actually). The other half is learning to assess those risks, and determine the most prudent course of action. All too often in life, people tend to let their emotions or gut instincts guide their decisions. Of course, there are some situations where that is appropriate, but generally, when it comes to financial decisions, a thoughtful decision always trumps a rush to judgment.
Gather All the Facts/Analyze then Act
One of the reasons attorneys are so particular about everything (to the point of being nitpicky) is that sometimes a small detail can make a huge difference in the outcome of a case.
This is also true when it comes to money matters. How many people have you met that know the amount of their monthly car payment, but couldn’t tell you the interest rate or term? Similarly, most homeowners can rattle off their mortgage interest rate, but how many could tell you the total amount of principal and interest they will pay over the life of that loan? In the case of the mortgage interest, the total cost is likely in the hundreds of thousands of dollars, which is not something easily ignored.
A large part of making sound financial decisions is taking the time to make a thoughtful analysis (or at least weigh the pros and cons). In order to do that properly, you need to know all the facts. By learning to take time upfront to gather all the information, you can save yourself time and money in the long run.
Lifelong Learning (and Earning)
By the time most attorneys pass the bar exam and get their law license, they have completed anywhere from 7-9 years of post-secondary education, earning at least a Bachelor’s degree and Juris Doctorate. Some particularly scholarly attorneys spend up to two extra years earning a Master of Laws in a specific area of law (e.g. an LL.M. in Tax Law).
Point being: you would think that after all that time in school, more studying would be the last thing on an attorney’s to-do list, right? Wrong. All 50 states have mandatory continuing education requirements which attorneys must complete in order to keep their license to practice law.
Because of this, most attorneys have become comfortable with the fact that learning is a lifelong endeavor. This is true no matter your profession. The more we learn, and the more often we expose ourselves to new thoughts and ideas, the better we become.
By embracing learning as something more than just sitting in a classroom, we can exponentially increase our learning potential. Learning does not have to just mean reading books. I personally take advantage of my daily commute to work by listening to podcasts on topics that interest me (such as The Dough Roller Money Podcast). Thanks to my smartphone and car stereo, I can have nearly two hours per weekday of education on everything from investments and money advice, to history, parenting, and more.
Learning can be done for fun, such as learning about new hobbies and games. It can also be done to advance our careers. The employee who learns about management concepts and techniques is in a much better position to move up in their company than the person who has given up on learning.
You Don’t Need to Know All the Answers
More than almost any other job, attorneys are thought of as having all the answers. Lawyers are expected to “know the law” and people tend to think we’ve got an encyclopedic knowledge of every area of law locked away in our heads.
Here’s the truth: most attorneys do know quite a bit about the area of law they practice, and they might have a working knowledge of a few other areas as well, but they don’t know everything. No attorney (or person for that matter) has all the answers. However, what all good attorneys do know is where to find the answers.
Often times, knowing where to look for the information (and knowing what to do with it once you find it) is much more important than having the answer off the top of your head. This is true when it comes to money as well. Sure, you probably don’t have your mutual fund prospectus memorized, but if you know where to find it, and know how to read it, it can be a useful tool.
It is understandable if these things don’t make you want to jump out of your seat and rush to sign up for the LSAT and pursue a career in law. Legal practice is certainly not for everyone. But hopefully by reading a bit about how attorneys think, you can now incorporate some of these principles into your life as well. If you do, you may find yourself pleading guilty to prodigious wealth accumulation.